Another Step Towards an East-West Trade War!

• Another step towards an East-West trade war! 
  by Ambrose Evans-Pritchard, http://www.telegraph.co.uk/ , 8 March 2013
  China’s trade figures released this morning are shocking. They tell us that China is still flooding the world with excess goods, and is once again a net drain on global demand.
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  As you may have seen, Chinese exports surged 22pc in February. Imports fell 15pc. This is exactly what pessimists feared. For all the talk of a great shift by China away from export-led growth to internal demand, the reality is that the Politburo is still propping up the same old system, still shovelling subsidies to loss-making firms and state behemoths to keeps factories open.
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  Investment is still 49pc of GDP. Consumption is still 36pc. China is still a massively deformed economy, and the global effects of its imbalances are getting bigger every year as the economy grows at far higher rates than the West.
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  The trade surplus with the US is the highest in four years. The US Treasury may well have been right to warn in its annual report on currencies that the recent fall in China’s current deficit to 2.6pc of GDP is temporary, to be followed by a rise back to 4pc or more by mid-decade. And remember, 4pc will soon matter as much for the world as 10pc in 2007. It is simple compound arithmetic.
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  Even if you strip out the distortions of the Lunar New Year and lump together January and February, it is clear that China’s trade surplus is growing again. Perhaps there is a lot of hot money pouring into China by the old trick of inflated invoicing, distorting the data. Perhaps not.
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  Societe Generale’s Wei Yao said the trade data is going to cause heartburn around the globe: “If these figures were indeed close enough to the actual situation, we think such strong exports may turn out to be more of a curse than a blessing for China. Against the backdrop of a meagre global recovery and heightened concerns over potential currency wars, China’s bi-lateral trade surplus with the US reached a record high in four years; and China snatched market shares from neighbours.
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